Michael Fumento

While the world’s attention is focused on Ukraine, deadly riots threaten to topple Nicolás Maduro’s socialist petro-autocracy

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Two crises: Ukraine and Venezuela. Both heartbreaking and, unfortunately, intractable. Yet even as hawkish pundits are practically chiding U.S. President Obama for not threatening war with a huge nuclear-armed country over Ukraine, Venezuela is almost ignored.

Venezuela sits alongside Colombia, where I live, on the northern coast of South America. It’s a lovely country that I’ve had the fortune to visit. With a population about that of Saudi Arabia, it has more known oil reserves — indeed, the most in the world. It’s also blessed with a cornucopia of other resources such as natural gas, gold, nickel, iron ore, steel, diamond, aluminum, coal, bauxite, and lots of arable land instead of blowing sand.

There could have been a Mercedes in every garage — or at least a nice Volkswagen. Instead, the nation hosts some of the worst shantytowns on earth

Yet instead of the Saudi Arabia of South America, what Hugo Chavez and his socialist “Bolivarian Revolution” left behind when he died of cancer a year ago after a 14-year reign, is a nation racked by murder and economic dysfunction. Yes poverty has decreased, but considerably less than in other South American nations; and in recent years, progress has stopped. The country has been devastated by inflation and shortages of necessities. Venezuela has also become one of the most violent nations on earth and the most corrupt in Latin America. How could this happen?

So preoccupied was Chavez with trying to be the first national leader to show socialism can actually work that he neglected to maintain Venezuela’s oil infrastructure. Prior to his taking power, exports were increasing every year. They could have been a Mercedes in every garage — or at least a nice Volkswagen. Instead, the nation hosts some of the worst shantytowns on earth. (I’ve seen them, albeit from a safe distance.)

Oil production has fallen by about a quarter, exports by half. Nor did the bold Red Beret make any efforts to diversify the economy: The country depends on oil for 95% of its exports and 45% of its federal budget revenues.

Chavez’s successor by electoral trickery, Nicolás Maduro, promises more of the same. Now the natives have become restless and many are fighting and paying with their lives, while opposition leaders are tossed in prison. About 28 people have been killed in riots since early February.

Can or should the United States do anything to help? Certainly, no one else can; other countries and international organizations have tried. But putting aside its rusted-out oil industry, Venezuela has no real strategic importance. Chavez’s efforts to “export” his revolution never got further than since-defeated efforts to aid Colombia’s FARC terrorists. He wasn’t “crazy like a fox,” as so many U.S. Latin American “policy experts” tried to portray him; just plain old crazy.

As Chavez did, Maduro tries to blame his country’s problems on business owners and scheming Americans. The United States has indeed profited from Venezuela’s slide — but not in the way that Maduro claims: Precisely because of Chavez’s ruinous policies, U.S. imports of Venezuelan crude are the lowest since 1985. This, in turn, has encouraged America’s move toward homegrown energy assets, such as shale gas.

Venezuela needs the United States to buy 40% of its oil exports, because Gulf of Mexico refineries were designed precisely to process the thick Venezuelan and Mexican crudes that most refineries cannot easily handle. But in recent years, the United States has been replacing its imports of Latin American crude with similarly-heavy petroleum from Canadian oil sands fields.

If the United States does decide to try to tip the scales against Maduro’s regime in Caracas, that nation’s reliance on U.S. refineries makes for America’s greatest tool. Indeed, some U.S. politicians have requested that the Obama Administration cut imports as a means to pressure Venezuela’s besieged government. But encouraging revolution by inflicting greater pain on a people is both morally and strategically dubious.

Maduro, as with Chavez, cares little for the suffering of his people. And restricting imports would play directly into the Chavez-Maduro claim that the United States is behind all of Venezuela’s problems, from hangnails to halitosis. Other countries in the area also might see this as a form of bullying, something they’ve been sensitized to after many generations of U.S. interference in the area.

And make no mistake, China will be there to “help.” China has become the real strategic threat to the United States in Latin America, through shrewd trade deals, loans, and outright aid. Just months ago, China invested US$14-billion in Venezuelan oil development, and has loaned the country US$40-billion to ensure access to dirt-cheap oil.

Moreover, U.S. oil refineries and major oil companies such as Chevron and Citgo would fight tooth-and-claw against any restriction on Venezuelan imports.

Sadly, all of this might have been academic if, during a two-day 2002 military coup, of which the CIA had advance notice, the United States had been more pro-active in keeping Chavez from returning to power.

Given the economic chaos in Venezuela — thanks in large part to price-controls, people cannot get access to basics such as flour, sugar, coffee and diapers — there’s an excellent chance of a similar coup against Maduro. If and when this happens, the United States should have a plan in place to co-operate with sympathetic officials, including the provision of aid-and-trade packages, such as those the Chinese have offered.

One day, Venezuela will both be free and wealthy. Alas, it likely won’t be any time soon.